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Review Introduces Additional Reporting Requirements for 2014

BOSTON – Pay for the chief executives of 25 of the largest Massachusetts non-profits ranged between more than $487,000 to approximately $8.8 million during the three-year study period of 2009 to 2011, according to a report released today by Attorney General Martha Coakley.

“Massachusetts is unique in that many of our largest employers are not-for-profit organizations,” AG Coakley said. “These organizations must compete with national for-profit companies for CEO talent while also staying true to their charitable mission. In order to continue to make sure this balance is met, we believe there must be greater transparency in fully reporting the amount of compensation and the way that it is set.”

As part of a push to obtain a fuller picture of executive compensation practices at public charities, the AG’s Office reviewed extensive data concerning CEO benefits and the processes used to set and assess the reasonableness of that compensation. Many of these organizations rank among the largest employers in the Commonwealth.

The report finds that CEO compensation is complex and comprises a variety of components, often including special retirement benefits in excess of those available to other segments of the workforce. It also finds that reported CEO compensation figures can vary greatly from year to year due to isolated payments or vesting events, making straightforward comparisons among different organizations and even different years at the same organization difficult.

The report suggests that adding certain additional data points to the analysis of “reasonableness” might moderate increases in executive compensation, allowing more charitable dollars to directly support the organization’s mission. Among the additional factors the report suggests are:

Consideration of compensation packages and rates of increase being offered to non-executive segments of an organization’s workforce;

Analysis of the relative magnitude of the CEO’s total compensation package in relation to that of the non-executive workforce; and

The consideration of the level of public support the organization enjoys in the form of exemption from property tax, corporate excise tax, sales tax and other forms of taxation.

The AG’s Office anticipates introducing its expanded annual reporting requirement on executive compensation, included in draft form in the report, in early 2014. The new reporting form will be part of the filings the Office collects and posts in searchable form on its public website: . For a copy of the report and appendices, please visit www.mass.gov/ago/ceocomp.